UPDATE 2-Ashtead confident in spite of tough year ahead
* FY pretax 87.4 mln stg, in line
* Sees difficult 2009-10, margins squeezed
* Keeps dividend at 1.675 p/shr
* Has no plans for fresh equity raising
* Shares up 5.2 pct (Adds details, share price, comments from CEO, analyst)
LONDON, June 18 (Reuters) - British equipment hire company Ashtead (AHT.L) said full-year profits fell 22 percent, as expected, but it plans no fresh equity raising and is confident even as it expects a tough year for the construction industry.
Ashtead, which rents industrial equipment from diggers to small tools in Britain and the United States, said a sharp drop in sales in the fourth quarter would carry over to next year as a lack of private commercial building projects hits around half its business.
"We would forecast 2009-10 will be difficult, that will impact adversely on margins as we saw in our Q4 performance," Geoff Drabble, Ashtead chief executive, said.
The group said, however, it is well positioned for the downturn, due to its low debt position and healthy balance sheet, adding it would not raise equity through a discounted rights issue or undertake a costly debt restructuring.
Further hope lies in a bounceback in the group's largest geographic region, the United States, which Drabble sees as early as the middle of next year, as well as long-term benefits from the U.S. stimulus package, aimed at bolstering the beleaguered construction sector.
"There is a reasonable thesis that we'll start to see a bounceback first in the U.S. probably in the middle of next year," said Drabble. "We would hope that our financial year, to 2010-11 will see some of that and we'll start to see an improving benefit from that in the financial year 2011-12," he said.
Shares were 5.2 percent higher at 0831 GMT as trading was in line with the group's statement in May, where it revealed fourth-quarter rental revenues down 24 percent, forcing its stock down 10 percent.
Nonetheless, some market commentators were left disappointed by the outlook.
"People were hoping that things might have improved, just because the market is very excited about greenshoots in other parts of the economy," Philip Sparks, analyst at Evolution Securities, told Reuters.
Ashtead reported an underlying pretax profit of 87.4 million pounds ($142 million), down from 112.3 million a year earlier but in line with a consensus forecast provided by the company. Continued...
